16.04.2014. The round table discussion on the topic of “Elimination of existing problems in the development of entrepreneurship” was held in the framework of the Entrepreneurship Development Foundation’s (EDF) Micro Enterprises Support Project by the financial support of US Agency for International Development (USAID). Event organized by Support for Economic Initiatives Public Union (SEI) and EDF took place in the conference room of the National Confederation for Entrepreneurs (Employers) Organizations of Azerbaijan Republic. Representatives of different ministries, business associations, local and international companies as well as lawyers and field experts participated at the meeting.

The following topics were discussed during the round table discussion:

• Proposals for the law amendments to reduce the number of procedures, time, and cost of real estate registration.
• Proposals to improve the performance of the institutions which affect the lending process.

The event was opened by the President of EDF Sabit Bagirov. He said that the event was organized as a part of the “Micro Enterprises Support Project” funded by USAID, the main goal of the project is to improve the business environment that will provide development of small businesses in Azerbaijan. He mentioned that during the project they will mainly work on preparing proposals on strengthening cooperation and dialogue between the government and civil society actors, improvement of legislation and institutional system, the successful development of small business entities (especially women and family businesses).

Sabit Bagirov noted that on March 3, 2014, the President of the Republic of Azerbaijan signed the decree  “ On additional measures for the development of entrepreneurship "  where he indicated 8 main directions where improvements can be possible. Proposals on two issues indicated in the decree were discussed at the round table. Discussed proposals later will be submitted to the government.

Deputy director of SEI Rovshan Agayev delivered presentation – "Business Problems: How the real estate registration system  can be improved?" During the presentation, Mr. Agayev spoke about the legal process of the primary and secondary land registration process as well as how much time it takes to accomplish the process. He mentioned that initial registration of land depending on the size of the land, cadastral plan, number of the coordination points in the area, and distance between different borders of an area can reach 1250 AZN. Notarization of the contract of sale of land is 126.5 AZN in Baku,  and 50,6 AZN in other cities and regions. The registry service fee - depending on the size of the structure varies in the range of 50-800 AZN. The registration period of the real estate is 20 days.

According to R. Agayev, both registration costs and periods are the same for the state registration in the registration department and initial registration (land and buildings). The only difference is in the number of required documents.  For the secondary registration (land and buildings) one only needs property confirmation and technical passport.

According to the presenter of the main problems affecting the registration of real estate in Azerbaijan is that land surveying plan requires quite a long time. The number of documents needed for the initial registration process is quite big.   Unlike the private apartments, the “single window” mechanism is not applied for the registration of the business properties.  Possibility to pay the registration fee through the internet does not exist, special banks are identified for these purposes.  Loss of the time is also caused by the inability to schedule the “Online Appointment” to present the documents.

In conclusion, the speaker presented the proposal of his organization to improve the registration process:

To complete the creation of an electronic database for an online inventory of the land acquisition process

• To provide a “single window” mechanism for registration of business property
• To establish an online schedule system for the registration to eliminate loss of time
• To develop an electronic payment system
• To simplify the registration procedure for the registration of buildings with an area under the 100 square meters intended for small and medium businesses.  Especially to eliminate the exploitation admission document.

Head of the legal department of State Real Estate Register Service under the State Property Committee Oktay Hasanov presented his approval with the raised issues and spoke about the work of his organization.  According to him the introduction of an electronic application system will help to reduce the overall encumbrance and raise the status of Azerbaijan in the “Doing Business” report. Also, the Registration service is working on reducing the number of procedures and soon the results will be presented.

Head of SEI Azer Mehtiyev and expert Samir Aliyev made a presentation on institutions that affect the process of improving the performance of the loans. Samir Aliyev presented to participants statistical analysis about the country's credit status, trends in recent years, the areal structure of loans, regional distribution, change in the trend of interest rates on the loans.  Besides, the presenter noted that access to loans is especially important for those who want to create new initiatives. Small businesses face more obstacles than large enterprises.

 Another presenter Azer Mehtiyev talked about the obstacles in access to credits. These obstacles are interest rate, commitment fees, physical access, lack of the required documents, discrimination, and institutional environment. Speaker also noted factors affecting the formation of interest rates on bank loans.

Referring to the institutions that affect the lending process, the speaker spoke about the role that Central Bank, credit unions, and state funds play in this context.

In the end, A. Mehtiyev presented recommendations of SEI for improving the functions of the institutions that affect the lending process. These recommendations are:

• Establishment of private credit bureaus. For this purpose, a separate law regulating the activities of credit bureaus ( "Private credit bureaus Act" ) should be adopted.
• National Fund for Entrepreneurship Support should give loans only to micro, small and medium-sized businesses.
• To establish specialized banks with the active participation of government in this process.  For example, the Agricultural Development Bank to finance the development of the agricultural sector.
• To establish insurance and guarantee funds for the credits given to SMEs, as well as the formation of a legislative base for further activities of this fund.
• To simplify the process of state registration of the real estate, to reduce cost and shorten the registration period.
• Simplify the process of the registration of non-bank credit institutions and credit unions.
• The establishment of an independent evaluation of the collateral objects.
• Establish a registration system for registration of movable property (not registered yet by state) to improve the collateral system. Adoption of the law on “Secured Transactions” this way creating a system of registration of movable property that cannot be registered in the current system.
• Increasing opportunities for the application of the principles of Islamic banking in the country. For this purpose adaptation of the new law or relevant amendment to the Bank legislation

Head of Micro Finance Association Azerbaijan Jale Hajiyeva agreed with the presented recommendations and noted the importance of giving credits to the agricultural sector.  The main problem that she mentioned was about repaying credits in the regions where farmers have to cross a long way to reach the banks, as a solution she suggested having credit payment posts at local post offices or opening new branches of the banks in the villages.

Participants of the round table had a chance to discuss the presentations.